BoE, ECB Hold Rates Steady December 14, 2023 Dow Jones at Record High!

Bank of England + ECB Hold Rates Steady

Last week, the Bank of Canada announced they were holding rates steady at 5%, where it's been since September. Yesterday, the U.S. Federal Reserve also announced they too were holding rates for the third consecutive month, as with the BoC but went one step further. Just two week ago, Fed Chair Powell stated he expected 2 interest rate cuts in 2024. After the conclusion yesterday of their last F.O.M.C. meeting this year, he changed his tune by stating that he now expects 3 rate cuts in 2024. Remember that 2024 is an election year in the USA so rate cuts were expected anyways.

This sent the Dow Jones Index to a new record high yesterday on market expectations of easing in the new year. The Dow surged 512 points on the FED news and topped 37,000. The previous high of 36,799 was set at the start of last year. The S&P 500 came within 1.9% of breaking its own record.

Seriously, if you want to see what hot air looks like, look no further than the stock market. Here we are, facing mounting debt and interest payments, a looming recession, mortgage app breakdowns and a credit crunch not seen since 1991 but the stock markets tell you everything is rosy. Don't believe it!

Another thing that shot up is oil. This morning, both Brent and WTI Crude are up just over 3%, thanks to the FED speak. WTI is now back above $70 and is presently at $71.65 while Brent is at $76.53, suggesting that gas prices are on their way back up. This increase is still relatively low so this gives us poor folks a chance to fill up before prices run sky high again. I have a feeling unfortunately, that the powers that be will drive oil back up to about $80, just in time for the holiday season, just weeks away. The U.S. dollar certainly indicates this.

The dollar plunged about 1.6 points almost immediately after the FED's statements yesterday, down to 101.98 at time of writing. The dollar peaked on October 2 at 107.077 just before the Hamas attack on Israel. As of this morning, the dollar is down more than 5 points since that time. This strongly indicates that higher oil / gas prices are on the way so once again, I recommend filling up if you need too.

An article published on Kitco News soon after the FED's announcements suggested the FED has reached the 'terminal rate', whereby interest rates went high enough to the point where it quelled inflation. I read recently somewhere that inflation is about 4% (Some say much higher and I degress). With interest rates at 5%, it can be ascertained that indeed, the terminal rate has been reached.

Suggesting further that the terminal rate has been reached, this morning the Bank of England and also the European Central Bank have also announced they are following suit by holding rates steady. The ECB states that while inflation has come down, they are sounding the alarm that inflation could pick up again in the near term while the BoE, while holding rates at 15 year highs (5.25%), indicated rates will stay 'higher for longer'.

Will other central banks follow suit? Likely, except the Bank of Japan. Their ultra-loose negative interest rate policy (for the last decade) means they are the last central bank to remain in such territory, although they are suggesting a possible pivot. Yet, at the same time, are saying they're not in any hurry to change their policies any time soon.

Bitcoin, (see the chart here) which had dropped below $41,000 before the end of the FOMC meeting, has since shot back up to $42,630 at time of writing, increasing by over $1,200 in the last 24 hours. Gold also reacted positively, as shown in the Kitco Gold chart below. Silver, which was pummeled down to just $22.50 yesterday, has shot up about $1.50 per ounce where it now sits, just above the $24 mark.

Spot Gold - December 14, 2023

I can only put so much in these posts. Please see the references section for more juicy details.

Ohhh, and by the way, earlier this week I reached a new milestone, surpassing 400 followers. This could not have been possible without the incredible support of the PublishOx community. I must be doing something write. Thank you everyone for your continued support.

Happy Holidays...

Peace and love to everyone!

P.S. Check out my entry in the Tectum SoftNotes writing contest, 'Thanks for the SoftNotes, Gramma'. Sure would be nice to win some Etherium, eh? 

Previous Posts:

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Name's Joe and I live in Ontario, Canada. I like writing on a wide variety of topics. I enjoy keeping track of markets, investing and commodities and the crypto sector. Also do some coding for web browsers.

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